Yahoo CEO optimistic in wake of Microsoft dustup

Published 5:30 am, Friday, August 1, 2008

Yahoo Chief Executive Officer Jerry Yang, under pressure from investors after spurning a $47.5 billion offer from Microsoft, said the company is on the verge of seeing its strategy pay off.

"We are still in the middle of a massive transformation," Yang told investors today at the Fairmont Hotel in San Jose, Calif., near the company's headquarters in Sunnyvale. "The Internet is still the only industry, really, that's growing in advertising revenue."

Yang, facing shareholders at his first annual meeting as CEO, has spent half of his tenure fighting to retain control of Yahoo, owner of the second most used Internet search engine. He turned down takeover offers from Microsoft, the world's biggest software maker, and forged a truce with billionaire Carl Icahn, who sought to oust Yang and the board.

"We also absolutely feel that we have to look out for what's best for shareholders," Yang said. "The board and the management team have always said, 'What is it that we can do best for our shareholders?'"

The company said it will release the results of its shareholder vote in a press release this afternoon.

Yahoo fell 2 cents to $19.87 at 2:52 p.m. New York time in Nasdaq Stock Market trading. Microsoft's offer sent Yahoo as high as $29.98 in February, and the software maker at one point bid $33 a share.

Chief Financial Officer Blake Jorgensen said Yahoo is seeing sales growth even amid the economic slowdown. He said the company's balance sheet is "extremely healthy" and that he sees share repurchases and acquisitions in years to come.

Since Yang, 39, took over in June 2007, Yahoo stock is down 29 percent. The company's share of the U.S. Web-search market has dropped 4 points from 25.1 percent, according to researcher ComScore Inc. in Reston, Virginia. And analysts estimate net sales growth will slow to 10 percent this year, the fifth straight annual decline.

Speaking about the negotiations with Microsoft, Yahoo Chairman Roy Bostock said the board was in charge of the talks. Icahn had accused Yang of sabotaging the takeover.

"I want to make it absolutely clear to everyone that the board controlled the process of dealing with Microsoft right from the beginning," Bostock said. "We called the shots and we were deeply involved in every step."

He said the company is meeting its goals and credited executives with "one hell of a performance." Some Yahoo shareholders applauded after Eric Jackson of Ironfire Capital LLC asked for Bostock to resign if investors withhold enough votes.